New research suggests consumers are willing to pay more for less – at least when it comes to processing and ingredients – giving brands a potentially lucrative reason to simplify products and a way to recoup some reformulation costs with a premium pricing strategy.
“Consumer interest in simple ingredients continues to grow, with 71% saying familiar or easy-to-recognize ingredients have become more important over the past three years,” according to a survey of 2,000 Americans conducted by LEK Consulting and published Oct. 5.
“Nearly two-thirds say the same about minimal processing and no artificial ingredients,” the report adds.
Drilling down, the survey found half of consumers (53%) say ingredients that are familiar or easy to recognize is important when selecting food to eat at home, and four in 10 say minimal processing (46%) and no artificial ingredients (42%) are important.
In addition, short ingredient lists were a top priority for 37% of survey participants.
These insights hold true across generations at a fundamental level, although some differences exist in the degree to which consumers deem a particular attribute important. For example, older consumers favor easy-to-recognize ingredients and attributes, while younger shoppers gravitate towards functional and free-from claims, according to the survey.
“Even so, familiar ingredients remain the No. 1 ingredient priority regardless of generation,” the report adds.
Consumers who value these attributes also are willing to pay 7% more on average for them, the survey reveals.
“About 70% say they would pay extra for products with familiar or easy-to-recognize ingredients. That figure rises to about 74% for low and no added sugar and 77% for minimal processing and no artificial ingredients,” the report reveals.
This doesn’t mean consumers have abandoned taste or price, however. LEK found that taste and flavor are the primary factors influencing at-home food and beverage decisions for 70% of respondents, followed by 64% who noted price and value. For comparison, 32% of respondents said they would pay extra for a product based on ingredients and how they are made.
The combination of the broad consumer desire for simple, recognizable ingredients and their “meaningful willingness to pay” for them creates a compelling argument for product and portfolio decisions, Alison Schilling, managing director and partner at LEK, argues in the report.
The shift predates MAHA
The uptick in consumer interest in simpler ingredients mirrors the rise of the Make America Health Again movement and the values espoused in the new Dietary Guidelines for Americans, which emphasizes “real food.”
However, Schilling cautions against attributing one to the other – noting instead that “recent guidance is more likely to reinforce shifts already underway than to drive them.”
She explained in the report that roughly one in five respondents said they were familiar with the updated US Dietary Guidelines, but only one in 10 said the guidelines prompted noticeable changes in their food and beverage purchases.
This aligns with earlier research published by the International Food Information Council that found 42% of the 3,005 Americans surveyed in late March and early April said they know a lot or a fair amount about the Dietary Guidelines – which is up 10 percentage points from 2011, but 4 points lower than in 2021.
Within three months of HHS publishing the new Food Pyramid, 83% of Americans said they had seen it, which exceeds awareness of the previous depiction of a healthy diet – MyPlate, according to IFIC.
IFIC also found a similar shift in consumers seeking products with simpler ingredient decks and processing that began before the new Dietary Guidelines were revealed.
“Since 2022, the most notable shifts in the criteria Americans use to define a healthy food are related to ingredients and processing,” IFIC revealed.
Specifically it found the percent of consumers who defined healthy food as having limited or no artificial ingredients or preservatives up 10%. While the percent defining healthy food as having a limited number of ingredients was up 7% and minimal or no processing was up 6%.
“This shift suggests that Americans are increasingly incorporating ingredient simplicity and degree of processing into their interpretation of what makes a food healthy,” IFIC notes in the report.
It adds: “This does not mean traditional nutrition criteria have become irrelevant. Rather, the findings indicate that Americans’ definition is expanding beyond nutrient content alone.”
Take together, these reports suggest that MAHA may be amplifying the trend, but the underlying consumer preference appears to have been building for years. They also underscore the long-term value proposition of reformulating products to remove artificial or extraneous ingredients.
While reformulating can be expensive, the research also shows some consumers are willing to pay a premium – helping to absorb at least part of that cost through a higher price. The challenge, however, will be determining which changes consumers value enough to pay for.
